Purchasing residential property in Zambia

Purchasing residential property in Zambia

Category International

According to Seeff Zambia, the residential property market is characterised by various types of houses which include, but are not limited to, stand-alone houses, semi-detached flats, and terraced flats.

Lusungu Kayela, licensee for Seeff Zambia says these types of houses can generally be categorised into high-cost, medium-cost and low-cost houses depending on the location.

Within Lusaka, the capital city of Zambia, these would be as follows.

High-Cost Residential Property

These are situated in areas such as Rhodes Park, Longacres, Sunningdale, Kabulonga, Roma, Roma Park, Kalundu, Mass Media and Fairview.

The plot sizes for high-cost residential properties normally range from 0.2 acre to 1 acre. Houses in some of these areas are old and buyers are currently paying premium prices and undertaking refurbishments or redeveloping the sites with modern apartments or office buildings.

The average sale price for high-cost houses in the above areas is about ZMW4,500,000 which is equivalent to US$225,000. However, the price is mostly dependent on the location, size of land and quality of the improvements, neighbourhood amenities and accessibility.

Medium-Cost Residential Property

Medium-cost houses are situated in areas such as Libala, Libala South, Kamwala, Chalala, Nyumba Yanga, Chelstone, Avondale, Chamba Valley and Foxdale.

The plot sizes for medium-cost residential properties are normally 20m x 20m, 25m x 20m, 30m x25m, 30m x 30m and 40 x 30m. The average sale price for medium-cost houses in the above areas is about ZMW1,350,000 which is equivalent to US$67,500. However, the price is mostly dependent on the location, size of land and quality of the improvements, neighbourhood amenities and accessibility.

Low-Cost Residential Property

Low-cost houses are situated in areas such as Chilenje, Bauleni, Chawama, Mandevu, Kabanana, Chasanga and Linda.

The plot sizes for low-cost residential properties are normally 20m x 20m and 25m x 20m.

The average sale price for high-cost houses in the aforementioned areas is about ZMW450,000 equivalent to US$22,500. However, the price is mostly dependent on the location, size of land and quality of the improvements, neighbourhood amenities and accessibility.

The Buying Process Explained

The process of buying a property generally starts with the owner of the property placing the property on the market for sale purposes either through the agents or by advertising it themselves. Potential buyers will then express interest in the advertised property by requesting more details, and in most cases will look for price discounts.

Once the buyer and seller agree on the sale price, a legal practitioner is then engaged to formulate a contract of sale of a property. Once satisfied with the terms of the contract, both the buyer and seller then sign the contract.

For the contract of sale to commence, the buyer is usually required to make a down payment which ranges from 15% to 30% of the total purchase price. The balance is then paid according to the progress made on the registration process of change of ownership. When the buyer pays 30% down payment, 20% of the purchase price is paid upon producing the Property Transfer Tax Clearance Certificate issued by the Zambia Revenue Authority (ZRA) which requires payment of tax by the vendor. The balance of 50% of the purchase price is paid upon completion of the registration process.

There are a number of commercial banks offering loans. The interest rate currently ranges from 15.6% to 34.50% per annum over a maximum repayment period of 25 years.

Registration of Change of Ownership Process

Once the contract of sale is signed, the registration process of change of ownership commences.

The process requires the following documents:

-          Original Certificate of Title

-          National Registration Card (for both seller and the buyer)

-          Investment License for Non-Zambian with companies

-          Certificate of Incorporation of for Companies

By attaching the above documents, an application for consent of the Commissioner of Lands is made and a consent fee of ZMW333.60 (for Zambians) and ZMW667.20 (for non-Zambians) is paid.

Once the Commissioner approves the consent, the next step involves payment of Property Transfer Tax (PTT) to the Zambia Revenue Authority (ZRA). PTT is 5% of the purchase price or the value of the property, whichever is higher. The seller pays the PTT while the buyer pays 1% of the purchase price or the value of a property as tax. Upon payment of the PTT, the ZRA issues a Tax Clearance Certificate.

The buyer and the seller are then required to sign the Deed of Assignment issued by the Ministry of Lands and Natural Resources.

The final stage involves the lodgement of the National Registration Cards for the buyer and the seller, an Investment License for Non-Zambians with Companies, Certificate of Incorporation for Companies, verified original Certificate of Title for the property, signed Deed of Assignment and payment of ZMW166.80 for the Certificate of Title.

Once the Commissioner of Lands is satisfied with the documents, a new Certificate of Title bearing the details of the purchaser (new owner) will then be issued.

Buyers to Please Take Note

Lusungu Kayela from Seeff Zambia says it is very important that buyers take great care when they are looking to purchase a property. They should always engage real estate professionals when making property purchasing decisions.

Buyers should never make any payment before signing the contract of sale. The purpose for purchasing a property should always be established before purchasing the property.

Author: Gina Meintjes